Failed merger strands local drug company

The chief executive of La Jolla Pharmaceutical said yesterday that the company is determining its next steps after failing to win support for a planned merger but that shutting down remains a likely outcome.

The company said Wednesday that only 13 percent of shareholders cast votes on the plan to merge with Del Mar-based Adamis Pharmaceuticals, well short of the majority necessary for the deal to go forward. It ended its efforts to get more votes after the Nasdaq Stock Market delisted its stock.

La Jolla had shut down virtually all its operations last year after a setback with the lupus drug it was developing but had negotiated a deal with Adamis that would have given its shareholders 30 percent of the combined company.

“We were disappointed that we were unable to secure sufficient interest from our stockholders to move forward with the merger,” La Jolla CEO Deirdre Y. Gillespie said in an e-mail. “The great majority of those shareholders who did vote were in favor of the transaction.”

The company had said previously that the probable alternative to the Adamis deal was to close the company, with shareholders likely to get 2 to 3 cents a share in the liquidation. Gillespie said that continues to be the company’s estimate.

La Jolla shares, now trading over the counter, closed yesterday at 8 cents, down 2 cents.

Gillespie said a major obstacle to getting approval of the Adamis deal was the company’s widely dispersed shareholder base, with many of the 66 million shares held by small shareholders. She said that made it “extremely challenging” to get affirmative votes from holders of the 33 million shares that would have been necessary.

The company is one of the older biotechs in San Diego County and has been a public company since 1994. Over the years, it spent more than $400 million on research and development, much of it focused on the drug for lupus.

But several trials of the drug didn’t go as the company had hoped. Last year, an independent monitoring board delivered an adverse report and determined that further efforts were “futile.”